U.S. Supreme Court: Health Care Individual Mandate A Tax

In a historic decision anticipated for months and impacting hundreds of millions of Americans, the U.S. Supreme Court ruled that the individual mandate – the cornerstone of the federal health care law – is allowed as a tax for people not having insurance.

“The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may be reasonably characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” the court said in its 5-4 ruling written by Chief Justice John Roberts.

The decision, which you can read here, is likely to spawn a new wave of controversy from critics as some will argue that the court's interpretation did not address the true constitutionality of the provision. Others will argue that the taxation rationale was not at the root of the court case. Still more opponents of the law will pursue other legal options aimed at striking down the measure.

Supporters cheered the decision claiming that the high court ruling keeps the federal law, the signature legislative achievement of Pres

ident Barack Obama, intact.

With the court's ruling, states will move forward with health insurance exchanges and other aspects of implementing the federal law. The Wall Street Journal reports:

The exchanges are set to open in 2014, the same year insurers will have to accept all customers regardless of their medical histories. The insurance mandate will also take effect that year. People must show when they file tax returns for 2014 that they had coverage during that year or pay a tax penalty. The size of the penalty will rise over time and eventually reach a maximum of several thousand dollars a year.

Also starting in 2014, companies with more than 50 workers will have to pay penalties starting at $2,000 per employee if they didn't offer a set level of health benefits.

The court did raise concerns about the law's expansion of Medicaid programs and how states could be impacted by provisions of the law.  In short, the ruling said states could not be penalized for opting out of the federal law's requirement that states expand Medicaid coverage.